HAMP, FHA Short Refi, Numerous Other Housing Programs Could be Eliminated

Mortgage and Lending with Total Mortgage Services

Financial austerity, eliminating the defici, and eliminating the federal debt has suddenly become very popular in Washington, D.C.  The House Financial Services Committee is going to meet later today to discuss upcoming proposals for the Federal Budget.  Among other areas up for review, a large number of public housing programs would be reviewed for inefficiencies and redundancies and potentially eliminated.

Among the programs to be reviewed or eliminated:

  • Fannie Mae and Freddie Mac will be reviewed and the committee will entertain proposals to “modify or eliminate” Fannie and Freddie’s statutory charters.
  • The committee will consider what role, if any, the government should play in the secondary mortgage market.
  • Fannie and Freddie’s participation in mortgage modification programs will be examined.
  • The Community Reinvestment Act – may be updated or eliminated entirely.
  • The National Flood Insurance Program will be reviewed.
  • The committee will look into appraisal fraud and the need for appraisal regulatory reform.
  • HUD, Rural Housing Service, National Reinvestment Corporation – the committee will review HUD programs with an eye toward eliminating inefficient or duplicative programs.
  • FHA Single Family program – will be examined to ensure losses will not expose taxpayers to risk.
  • FHA multi-family program – will also be examined to ensure losses will not expose taxpayers to risk.
  • The Home Affordable Modification Program (HAMP) – the government’s “flagship” loan modification program, which has by most accounts been a dismal failure, would be eliminated.
  • Section 8 Housing Choice Voucher Program, which provides rental assistance for low income families would be “reformed”.
  • NeighborWorks America, a government chartered non-profit program that focuses on mediation and community reinvestment would be eliminated.
  • HOPE VI – a program that provides grants that allow public housing authorities to demolish and refurb distressed buildings would be eliminated.
  • HUD’s public housing programs would be reviewed.
  • The new mortgage broker compensation rules will be reviewed.
  • Rural Housing and Economic Development Program would be eliminated.
  • The Neighborhood Stablization Program would be eliminated.
  • The Sustainable Communities Program would be eliminated.
  • The Public Housing Capital fund would be eliminated.
  • The Federal Housing Administration’s Refinance Program for underwater borrowers (aka the FHA Short Refi Program) would be eliminated.

Undoubtedly, there is a lot of waste in the federal government, and many housing programs should be reviewed.  That said, it seems to me that the amount of money that would be saved by eliminating or reducing these programs pales in comparison to the truly gigantic amount of money that we have dumped into wars in Iraq and Afghanistan (three trillion dollars!).  I find much of this talk of cutting the budget and the deficit (from both sides of the aisle) to be disingenuous political grandstanding to say the least.


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